Options Flashcards
1
Q
Options
WHY would you buy?
WHY would you sell?
A
SPECULATIVE
bought for leverage
sold for income
2
Q
Hedge positions
WHAT & WHY?
A
Combines a stock position with an option contract
Buy to reduce risk when buying or selling stock (short)
buy for best protection
3
Q
Long straddle
WHY would you buy, what is risk???
A
Expect volatility
Limited loss risk
4
Q
Short straddle WHY would you buy and what is risk?
A
Expect stability, risk UNLIMITED
5
Q
Spreads- WHY and what is risk
A
Speculative strategy, limited risk
